For Sale by Owner Contract

Don't be Handcuffed by Time Frames

On this page concerning the for sale by owner contract, I'll share with you some time guidelines to follow.

If someone else brings you a real estate contract already filled out for you, the same rules apply.

Again, I will advise you to read the disclaimer page, if you haven't already.

Because this page may deal with real estate clauses, forms, and contract law, I can not take any responsibility if you follow any or all the guidelines on this page.

If you agree, please continue. If not, please proceed to another area of this web-site. Thank-you. :)

Why Worry About Time?

For example: You do not want to tie up your property for a buyer that is going to take 45 days to find suitable financing.

Here is an example of what can happen.

The buyer writes up the financing clause that states:

* Subject to finding suitable financing of 95% of the purchase price, within 45 days of the offer being accepted. *

First of all it should be an exact date and time rather than a time frame but, I'll cover that shortly and of course why.

The Sad Truth

The buyer may have put 45 days in because, they have already been to 3 banks and have been turned down because of bad credit.

The buyer thinks that if they just have enough time, they can find some lending institution that will be willing to advance them the mortgage.

The Problem

2 days later you receive a very good offer for full price, 75% down payment, and a perfect closing date.

You can accept the new offer subject to the first offer falling apart BUT, here is something I'll almost guarantee.

* The first buyer will take the full 45 days to try to secure the mortgage.

* The second "golden" buyer will be long gone and you will be back to square one.

And that my dear friend, is why you want to know about this time stuff, when it comes to a for sale by owner contract!

Now That I Have Your Attention :)

You may say to me, "Doug, won't my lawyer catch that?"

Yes, they may advise you that the time frame is to long but, that is not their job when reviewing your for sale by owner contract.

Their job, is to make sure the contract is legal, written correctly, and binding to both parties.

What you agree to is your business, when it comes to things like time frames.

Don't get all excited though. This is also easy, once you follow a few simple rules.

Keep in mind that your county, city, town, state, country etc. might use different time frames in a real estate contract.

Rules on Time Frames

You are the seller. When it comes to time frames concerning conditions to be met with the for sale by owner contract, shorter is better. So, here are the rules that I advise.

* Try to have the times fall on a work day and if possible, Monday, Tuesday, Wednesday or Thursday. Why? In case there is a glitch, 4:00 p.m. on Friday is not a great time to find out!

* Make the time frame for satisfying the condition as short as possible.

* Use exact dates and times rather than number of days. i.e. On or before the 5th day of November, 2009 at 3:00pm EST. (OK, perhaps you can drop the time zone.) I just always liked to make sure there wasn't any misunderstanding.

Why exact dates and times? Exactly, there is no confusion or argument. It's like I say, exact.

* When looking at or writing a clause in a real estate contract, make sure it answers all the who, what, when questions.

For a quick review, you can go to How to Write Your Own Clause

What is a Reasonable Time?

The time you will allow for various clauses on the for sale by owner contract, depends on;

* Where you live.

* What day of the week the contract is written. Is there a long weekend involved or a major holiday?

* The type of condition that needs to be met.

* Individual circumstances.

Let's take a look at each of these, shall we?

Where You Live

If you live in an area that both you and the buyer can quickly access to satisfy a clause, short time frames are in order.

If you live in an area that you or the buyer has to travel a long distance to various areas, you could allow a bit more time.

What day of the Week

If you live in an area where lawyer offices, mortgage lenders etc. are open from Monday to Friday, and you receive the offer Friday evening, when calculating the time, don't count the week-end.

You also should be aware of any major holidays or long week-ends involved when writing or reviewing a for sale by owner contract.

The Type of Condition to be Met

This is a real rough outline based on my own experience when writing a real estate contract, so don't take this as written in stone.

* Review by lawyer - 24 hours unless week-end or holiday.

* Financing - Maximum 5 business days. If everything is straight forward, many mortgages can be put together in 24 hours.

* Building Inspection - Maximum 5 days

* Subject to a third party (parents as an example) viewing and approving purchase - Maximum 48 hours.

* Any other clause with a time frame - Use common sense. Keep as short as reasonable, while being fair to the buyers.

Individual Circumstances

There may be individual circumstances, that may have to be considered on your for sale by owner contract. You will be the best judge for that.

An example could be that the building inspector that the buyer is using, may be away on business for the next 4 days.

You could either ask the buyer to select another inspector, or if you are feeling comfortable, allow a longer time period.

You wouldn't have to add on an extra 5 days. Perhaps another 2 days to allow the inspector to do up his or her report would work.

Possession Date

The possession date is between you and the buyer. Just a couple notes I'd like to add.

* Make sure the possession date doesn't fall on a holiday where you live, a week-end, or a day that banks, lawyers etc. are closed for business.

* The end of June in Canada and United States is the most common date for closing property. Your time of year may be different. Be careful whatever that date may be, where you live.

Two reasons are;

- Real estate lawyers are very busy, so book an appointment well in advance.

- The moving companies are overloaded with business, so book well in advance.

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